There's still an incentive to do cash deals (the huge underground economy is still a problem).It's not worth it for business owners to do a cash deal anymore, not in today's day since the owner now has to pay hst on all his stock and products. If the OP wasnt charged tax the auto shop did him a solid.
To the OP to touch on your point about what other dealers are saying to you, I wouldn't put too much trust in what they have to say, obviously it's not in their best interest to be honest with you, they want a new customer! Do you not get that?!
The HST they pay for their stock and supplies, is recoverable as an input tax credit.
Assuming they are paid in cash for certain jobs (and don't claim it - thank you James Kirk), not only do they evade the obligation to collect & remit HST, but they also evade INCOME TAXES (much more than 13%).
(I don't condone what I just explained).